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B.C. finance minister optimistic provinces will see merit in national securities regulator

B.C. Finance Minister Mike de Jong (left) shakes hands with Ontario Finance Minister Charles Sousa as federal Finance Minister Jim Flaherty looks on after the trio signed an agreement on a national securities regulator Thursday.

Photograph by: Adrian Wyld
, THE CANADIAN PRESS

British Columbia Finance Minister Mike de Jong said the prospect of the federal government attempting to force the creation of a national financial-market regulator and a prolonged battle with provinces against it encouraged B.C. and Ontario to sign on to the framework for a cooperative effort Thursday.

It has been a back-and-forth battle with provinces, including B.C. initially, which disputed a federal incursion into provincial jurisdiction over the investment business. The battle last came to a head in 2011 with a Supreme Court of Canada decision in a case brought by Alberta that proposed federal legislation at the time would infringe on provincial rights.

However, with Ottawa continuing to suggest it was willing to continue pursuing a unilateral option, de Jong said there was encouragement to seek an alternative.

“We’ve seen that movie before as Canadians,” de Jong said, “it involves constitutional challenges, three years of wrangling and that doesn’t serve anyone.”

“My submission to Ontario as the largest player in this field was that British Columbia (was) prepared to sit down with you to try to arrive at a solution that will avert that traditional adversarial approach.”

The three signatories — B.C., Ontario and the federal government — are aiming to have their pieces to implement the new, cooperative national securities regulator in place by 2015.

However, the immediate next step for de Jong and Ontario Finance Minister Charles Sousa is to begin selling it to their provincial and territorial counterparts Monday at a meeting of the finance ministers in Quebec.

And while the national regulator appeared to be an immediate hard sell, with Quebec Finance Minister Nicolas Marceau dismissing it out of hand and Alberta Premier Alison Redford upset the province wasn’t consulted, de Jong said he’s “cautiously optimistic” other provinces will sign on as they become more familiar with the terms.

Within the industry, Peter Brown, who founded Canaccord Financial and remains a director, said the structure of the framework — which calls for strong regional offices with the ability to contribute market innovation in niche areas such as mining or energy — is in the interests of other provinces.

Brown added that it is a departure from previous attempts to create a national regulator, which were seen as being too centralized in Ontario, and the new structure should bring other provinces along.

“I think there’s a lot in a name: cooperative capital markets regulator,” said Brown, who also served on the advisory group related to the effort.

The new body will be more efficient, Brown added, and have better resources to develop policy and regulations for new products such as derivatives compared with provincial securities commissions. He also likes that it will be accountable to a national board of directors, which is to be selected by a council of the provincial finance ministers.

The effort also won approval of investor groups such as the Canadian Foundation for Advancement of Investor Rights (FAIR Canada), which came out Thursday with a congratulatory statement about the prospects for better market enforcement.

“FAIR Canada believes that the creation of a common securities regulator with investor protection as a top priority will provide greater protection for retail and other investors,” the organization said.

De Jong added that a common regulator will offer better coordination for investigations and enforcement.

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